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The Role of Budget Contraints in Sequential Elimination Tournaments

Discussion Papers 1777, 41 S.

Malin Arve, Olga Chiappinelli


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Motivated by the EU concept of Pre-Commercial Procurement and the massivepresence of SMEs in the European economy, we study how budget constraints affect R&D effort in sequential elimination tournaments. We show that introducingbudget constraints leads to a non-monotonicity in unconstrained contestants' effort.Furthermore, we show that if the budget asymmetry is not too large, unconstrainedcontestants exert higher effort than when faced with unconstrained contestants only.

Olga Chiappinelli

Research Associate in the Climate Policy Department

JEL-Classification: D72;H57
Keywords: Pre-commercial procurement, contests, budget constraints
Frei zugängliche Version: (econstor)